A Senate budget panel reviewing the state's troubled juvenile services system presented department officials today with a dramatically revised spending plan for the coming year and raised the possibility of closing of one of the state's largest juvenile detention centers.

One senator called the Juvenile Services Administration "an utter failure" and the subcommittee told juvenile services officials that they would not approve nearly $2 million of the nearly $6 million increase requested by Gov. Harry Hughes for the purposes for which it was intended in the wake of critical internal audits and a year-long series of problems.

Instead, the members of the committee urged the department to redirect the $2 million to purchase services in community-based facilities and to study the feasibility of closing the Montrose School in Baltimore County.

They also directed the department to hire contractual instead of full-time staff and cancel construction for 40 new beds at one institution for juveniles. Lawmakers can cut the budget but cannot add to it. Their decisions on reprogramming funds must come in the form of language included in the budget bill and recommendations to the department.

"The issue is, you aren't doing the job. You've been an utter failure -- not you personally but the JSA. We're very unhappy with the way it's being operated," Sen. John C. Coolahan (D-Baltimore County) told a panel of Health Department officials who oversee juvenile services, including Health Secretary Adele Wilzack and Acting Juvenile Services Administrator Richard Hamilton.

If approved by the full Budget Committee, as seems likely, the changes would force a dramatic shift away from institutional commitments of young offenders.

Criticism of the state's juvenile program intensified recently after an internal audit requested by the department showed that youths often are inappropriately placed in detention facilities because less restrictive alternatives are unavailable in some counties, that detention facilities are overcrowded and understaffed, and youths with special problems like alcohol and drug abuse are not well served.

These problems were highlighted late last month when a 13-year-old hanged himself at the Montrose School in Reisterstown in an apparent suicide pact with his girlfriend at the school, setting off a rash of suicide threats at Montrose.

"Unfortunately a situation like that tends to bring everybody to a grinding halt," said Sally Myers, deputy director of the Maryland Disability Law Center, which represents some of the youths at Montrose. "I think it's terrific what the senators have done, which is to say: Why move more money to an institution that isn't working? In the meantime the JSA is going to have more money with more flexibility."

The Senate panel also is investigating limiting admissions to the Montrose School to a specified level and decreasing the commitments there over time.

Department officials said they need more time to study the specific recommendations, but they agreed yesterday to study the possibility of closing the Montrose School. They strongly opposed any efforts to cut staffs, however, including 10 new positions at the Charles H. Hickey Center in Baltimore County and 16 new administrative positions.

"We are understaffed," said Wilzack. "We can move people around but there are not enough people.